Bonner

*** “Is the United States no longer the global beacon of unfettered, free-market capitalism?” asks the International Herald Tribune .

“We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have imagined itself doing in its wildest dreams,” says Ron Chernow, a leading American financial historian.

Where has he been? Where have they all been? They might as well be a spider watching a couple make love; he sees the action but has no idea what is going on.

The Bush Administration has been the most liberal administration since Franklin Roosevelt. It has added more debt, more restrictions, more jackass programs, wars, spending, humbugs and bamboozles than any U.S. government in half a century. The one thing it hasn’t done is raise taxes to increase federal revenues; thank God. But it spent the money anyway!

Not that we’re complaining. Far from it. We’ve enjoyed the show.

Besides, our role here at The Daily Reckoning headquarters is not to gripe and moan...but merely to try to understand. How is it possible for a “conservative” government to nationalize the insurance business? What comes into the heads of “conservative” leaders that makes them want to spend a half trillion they don’t have bailing out investors? Why would any U.S. official with his wits about him want to raise the possibility of war with Russia...over Georgia? Maybe Atlanta would be worth defending...and even there we have our doubts. But Tbilisi?

How does it work? How do people come to think such things? We don’t know, but we have a theory:

People come to think what they must think when they must think it.

In other words, history follows certain patterns. Not predictable. Not exact. But broadly reflecting the inherent blockheadedness of the race...and generally in line with historical precedents.

America is in a period of imperial decline. Its economy is slipping. It citizens are getting poorer, both absolutely...and relative to the rest of the world. The “smart” thing to do would be to hunker down, cut costs, bring troops home, reduce Medicare and Medicaid, raise interest rates, encourage saving and give the country time to get back on its feet economically...so it could enjoy its relative decline with good grace.

But that’s not the way history works. Did Alexander stop at the Hellespont? Did Napoleon stop at the Rhine? Did Hitler stop at the Oder? George Bush I stopped at the border of Iraq. But George W. Bush, under the sway of the neocons, kept going. His mission: to destroy the U.S. empire.

No, of course...he doesn’t know that’s his mission. He’s an agent of change...a useful idiot, as Lenin would have said...a stooge...willing to do what isn’t so smart, but what helps the course of history along to its end.

And now, we have a financial crisis. Does the government respond like Andrew Mellon in the ’20s? “Liquidate labor...liquidate the banks...liquidate the farmer...” said Mellon, willing to let the chips fall where they may. No. That would be smart. Get it over with. Move on. But because the U.S. economy is in a long-term decline, moving on is the last thing people want. In the ’20s, the United States could let chips fall...because it had a growing, dynamic economy. Other chips would rise up quickly. But now it must try to keep the chips from falling...because it is mature...aging...decaying. It wants to hold on...to keep things together...to avoid change.

That’s why socialism is so attractive to Americans...it offers the illusion of safety and stability.